All New Disclosures should appear in the Management Discussion and Analysis Statement
description
Transcript of All New Disclosures should appear in the Management Discussion and Analysis Statement
![Page 1: All New Disclosures should appear in the Management Discussion and Analysis Statement](https://reader035.fdocuments.us/reader035/viewer/2022062814/56816842550346895dde15ea/html5/thumbnails/1.jpg)
All New Disclosures should appear in the Management Discussion and
Analysis Statement
Presented by: Carrie Chiu (50191895)Erica Tsang (50194420)
Sharon Cheung (50196817)Danny Tse (50196240)
![Page 2: All New Disclosures should appear in the Management Discussion and Analysis Statement](https://reader035.fdocuments.us/reader035/viewer/2022062814/56816842550346895dde15ea/html5/thumbnails/2.jpg)
Agenda Definition of MDA Objective of MDA Background on MDA Disclosure requirements in the US Definition of All New Disclosures Advantages of MDA Disadvantages of All New Disclosures Recommendations
![Page 3: All New Disclosures should appear in the Management Discussion and Analysis Statement](https://reader035.fdocuments.us/reader035/viewer/2022062814/56816842550346895dde15ea/html5/thumbnails/3.jpg)
Definition of MDADiscuss:
financial conditionchanges in financial conditionresult of operationsknown trend, uncertainties
material effect of the firm
![Page 4: All New Disclosures should appear in the Management Discussion and Analysis Statement](https://reader035.fdocuments.us/reader035/viewer/2022062814/56816842550346895dde15ea/html5/thumbnails/4.jpg)
Objective of MDA
assists user to assess the future prospects of the firm
make better decision
![Page 5: All New Disclosures should appear in the Management Discussion and Analysis Statement](https://reader035.fdocuments.us/reader035/viewer/2022062814/56816842550346895dde15ea/html5/thumbnails/5.jpg)
Background on MDA
MDA in other countriescompulsory component e.g. Australia, Japan, the USAguideline e.g the USA: SEC Regulation S-K
![Page 6: All New Disclosures should appear in the Management Discussion and Analysis Statement](https://reader035.fdocuments.us/reader035/viewer/2022062814/56816842550346895dde15ea/html5/thumbnails/6.jpg)
Background on MDA (Con’t)MDA in Hong Kong
voluntary disclosuresno guidelinemay be disclosed in Chairman’s Reportmay have other titles e.g. Corporate Governanceprepared by management & accountants
![Page 7: All New Disclosures should appear in the Management Discussion and Analysis Statement](https://reader035.fdocuments.us/reader035/viewer/2022062814/56816842550346895dde15ea/html5/thumbnails/7.jpg)
Disclosure Requirements in the US
LiquidityCapital ResourcesResults of Operations
![Page 8: All New Disclosures should appear in the Management Discussion and Analysis Statement](https://reader035.fdocuments.us/reader035/viewer/2022062814/56816842550346895dde15ea/html5/thumbnails/8.jpg)
Disclosure Requirements in the US (Con’t)
Liquidityknow trends & other factors
material affects liquiditye.g. short-term, long-term needs indicators of liquidity: cash
![Page 9: All New Disclosures should appear in the Management Discussion and Analysis Statement](https://reader035.fdocuments.us/reader035/viewer/2022062814/56816842550346895dde15ea/html5/thumbnails/9.jpg)
Disclosure Requirements in the US (Con’t)
Capital Resourcescommitments for capital expenditures sources of financingknow trends in capital resourceschanges between debt, equity, off-balance sheet financing
![Page 10: All New Disclosures should appear in the Management Discussion and Analysis Statement](https://reader035.fdocuments.us/reader035/viewer/2022062814/56816842550346895dde15ea/html5/thumbnails/10.jpg)
Disclosure Requirements in the US (Con’t)
Results of Operationssignificant components of revenues & expensesmaterial nonrecurring events/ trends/ uncertainties
affect the incomee.g. turnover, gross profit
![Page 11: All New Disclosures should appear in the Management Discussion and Analysis Statement](https://reader035.fdocuments.us/reader035/viewer/2022062814/56816842550346895dde15ea/html5/thumbnails/11.jpg)
Definition of All New DisclosuresDisclosures
no standard and regulationsdepends on the companyany informatione.g. financial leverage, management level, human resources, risk & return, difference between the actual profits and budgeted profits, external environment assumption:All new disclosure = ALL the NEW Information
![Page 12: All New Disclosures should appear in the Management Discussion and Analysis Statement](https://reader035.fdocuments.us/reader035/viewer/2022062814/56816842550346895dde15ea/html5/thumbnails/12.jpg)
Advantages of MDA
more information for investment decision-making securities market efficiency better assessment of the company
![Page 13: All New Disclosures should appear in the Management Discussion and Analysis Statement](https://reader035.fdocuments.us/reader035/viewer/2022062814/56816842550346895dde15ea/html5/thumbnails/13.jpg)
Advantages of MDA (Con’t)
More information for investment decision-making assist investors in assessing uncertaintieshelpful in better enabling users to assess the probabilities of future profitability, cash flows, or dividend from their investments forecast more accurately the company’s future earnings
![Page 14: All New Disclosures should appear in the Management Discussion and Analysis Statement](https://reader035.fdocuments.us/reader035/viewer/2022062814/56816842550346895dde15ea/html5/thumbnails/14.jpg)
Advantages of MDA (Con’t)
Securities market efficiency improves the proper working of securities markets potential to reduce inside informationraise the transparency of the company
facilitates the development of stock market
![Page 15: All New Disclosures should appear in the Management Discussion and Analysis Statement](https://reader035.fdocuments.us/reader035/viewer/2022062814/56816842550346895dde15ea/html5/thumbnails/15.jpg)
Advantages of MDA (Con’t)
Better assessment of the companynon-monetary information such as financial leverage, management level, human resources would be disclosed provides a clear picture of the company enables investors to assess the future prospects of the company
![Page 16: All New Disclosures should appear in the Management Discussion and Analysis Statement](https://reader035.fdocuments.us/reader035/viewer/2022062814/56816842550346895dde15ea/html5/thumbnails/16.jpg)
Disadvantages of All New Disclosures
Irrelevant informationdiscloses significant & non-significant informatione.g. employment benefit
cannot help decision making
cannot show clear and concise picture
![Page 17: All New Disclosures should appear in the Management Discussion and Analysis Statement](https://reader035.fdocuments.us/reader035/viewer/2022062814/56816842550346895dde15ea/html5/thumbnails/17.jpg)
Information overloadrelevant, in great details, much supplyimportant, may not be desired by investors
e.g. Fixed asset investment is important report $500 purchase of a printer? report $20,000 refurbishment?
Disadvantages of All New Disclosures (Con’t)
![Page 18: All New Disclosures should appear in the Management Discussion and Analysis Statement](https://reader035.fdocuments.us/reader035/viewer/2022062814/56816842550346895dde15ea/html5/thumbnails/18.jpg)
Repetition to show better performance e.g. turnover changes, % rise in gross profit
Disadvantages of All New Disclosures (Con’t)
redundancycannot help decision makingcannot show clear and concise picture
![Page 19: All New Disclosures should appear in the Management Discussion and Analysis Statement](https://reader035.fdocuments.us/reader035/viewer/2022062814/56816842550346895dde15ea/html5/thumbnails/19.jpg)
Cost ineffectivemonetary basis: hires staff to analyze
irrelevant and redundant informationtime basis: disrupts normal daily business operation
Disadvantages of All New Disclosures (Con’t)
![Page 20: All New Disclosures should appear in the Management Discussion and Analysis Statement](https://reader035.fdocuments.us/reader035/viewer/2022062814/56816842550346895dde15ea/html5/thumbnails/20.jpg)
Decline in competitive advantagediscloses operations to competitorsfollows suits by competitors
Disadvantages of All New Disclosures (Con’t)
affects service/product differentiationdecreases earnings
![Page 21: All New Disclosures should appear in the Management Discussion and Analysis Statement](https://reader035.fdocuments.us/reader035/viewer/2022062814/56816842550346895dde15ea/html5/thumbnails/21.jpg)
Recommendations
Management Discussion and Analysis in every annual report
BUT not all new disclosures
![Page 22: All New Disclosures should appear in the Management Discussion and Analysis Statement](https://reader035.fdocuments.us/reader035/viewer/2022062814/56816842550346895dde15ea/html5/thumbnails/22.jpg)
Recommendations (Con’t)A new HKSSAP---governs the content of MDAe.g. risk factors relating to specific
company impact of technology development to the
company industry development
build up confidence of the investorsimprove corporate governance in H.K.maintain H.K. as an international financial center
![Page 23: All New Disclosures should appear in the Management Discussion and Analysis Statement](https://reader035.fdocuments.us/reader035/viewer/2022062814/56816842550346895dde15ea/html5/thumbnails/23.jpg)
The End